Dangerous gaps in New Zealand’s company registration system are being exploited by arms brokers, aid organisation Oxfam says.

“Controls around company registration in New Zealand need to be tightened to prevent New Zealand businesses from unwittingly or deliberately facilitating illicit arms transfers,” the group says in a report today.

Oxfam’s “Brokers without Borders” examined the way a New Zealand company, SP Trading Ltd, smuggled arms out of North Korea late last year for an unknown destination.

Oxfam noted that nobody in New Zealand has been prosecuted for the arms trading despite it breaking United Nations sanctions and New Zealand law.

The 35 tonnes of arms were discovered in Bangkok, aboard an Ilyushin-76 cargo jet, on December 11.

Their destination was never clear although Oxfam says they believe they were bound for Somalia.

Commerce Minister Simon Power has, since the incident, made changes to the company registration system after complaints it was too easy for anybody to register a company online here.

The so-called “shell companies” have single public directors who are used to hide the beneficiary owners of the firms.

SP Trading turned out to be one of hundreds of companies created out of a single address in Queen Street, Auckland.

Oxfam says in its report that a “higher level of crosschecked documentation should be required for company registration in New Zealand.

“Additionally, increasing the legal obligations of the true beneficial owner will contribute to New Zealand’s ability to identify and prosecute arms dealers operating behind shell companies.”

Oxfam said the changes proposed by Mr Power did not go far enough.

They also said that an investigation should be launched into SP Trading’s violations of UN and New Zealand law.

They would “serve as a strong deterrent to illicit arms brokers considering using New Zealand shell companies for their activities in the future”.

The sole director of SP Trading at the time, New Zealand woman Lu Zhang, is currently before the courts for providing incorrect information on registration details. She is not facing charges related to the arms trading.

SP Trading is still registered but with a director and shareholder listed in Vanuatu.